Producers of food, drugs, mass merchandising items and related products in the packaged goods industry use various marketing techniques to encourage consumer purchases and establish brand loyalty. Two of the most commonly used purchase incentives are the rebate offer and the discount coupon. Both of these purchase incentive media, under current systems, present significant problems in distribution, fulfillment and redemption.
The rebate offer essentially offers a refund from the manufacturer to the consumer for the purchase of a specified quantity of a particular product. Because the rebate offer often requires the purchase of more than one of the rebated product, it serves as an enticement for the consumer to continue purchasing the rebated product. This multiple purchase requirement has more potential for developing sales volume and brand loyalty than incentives, such as the discount coupon, which encourage the one-time purchase of a product. However, the incentive created by rebate offers is diminished by the inconvenience in fulfilling offer requirements and the unreliable nature of the redemption process. These shortcomings reduce the value of the rebate offer to both the consumer and the manufacturer.
Regarding the offer requirements, the consumer is typically required to save proofs-of-purchase from product packaging and mail them with an associated offer form to the manufacturer to earn the rebate. Many consumers find it too inconvenient to remember to remove the proofs-of-purchase from products purchased over an extended period of time and save them with the associated form. Additionally, the postage for mailing the proofs of purchase diminishes the value of the rebate to the consumer.
Another disadvantage of the current rebate system is that some consumers from different households pool their proofs-of-purchase to submit for rebate. Although this practice results in quicker rebate redemptions for these consumers, it defeats the purpose of the manufacturer for offering multiple purchase rebates. Consumers engaging in this practice will likely switch brands to take advantage of other rebate offers when, together, each participating consumer has to purchase only one of the rebated products. Hence, it is an object of the invention to provide a multiple purchase incentive method which assures participating manufacturers that a single household purchases the required quantity to earn the purchase rebate.
When a consumer does perform the necessary steps to receive a rebate, he must typically wait several weeks to receive the rebate from the manufacturer. In addition, manufacturers often delegate rebate redemption processing to coupon clearinghouses. These clearinghouses often use unskilled labor to process coupons and rebates in large volumes. As a result, a substantial percentage of redemption requests are lost or improperly processed. In view of the inconvenience and lack of reliability to consumers of mailing the necessary documents to the manufacturer to receive a rebate, it is still another object of the invention to provide a system that automatically credits a consumer's purchases toward a purchase reward without the mailing requirements.
Regarding coupons as purchase incentives, a brief description of the current coupon distribution and redemption system and the prior art developments in that area will indicate further advantages of the present invention as a method for effecting purchase reward offers. Typically, coupons are distributed to the public through newspapers, magazines and direct mail. The consumer clips the coupon from the publication and presents it when purchasing items at the check-out counter of a retail store. At least in theory, the check-out clerk inspects the coupon to ensure that all the conditions for its redemption are met. A typical condition for redemption is the purchase of a specified item before a specified expiration date. If the coupon is validly presented, the clerk deducts the coupon value from the consumer's bill.
In the reimbursement process, retail store personnel periodically gather all redeemed coupons, sort them according to manufacturer, and tally the individual totals for reimbursement. The calculated figures and coupon groupings are usually audited by a coupon clearinghouse which then sends them onto the manufacturers. The manufacturers then reimburse the retail store for the redeemed coupons plus a standard handling charge.
Through the years, members of the packaged goods industry have experienced many problems with the coupon distribution and redemption system. For example, in the area of distribution, manufacturers have found that few consumers will go through all the steps necessary to redeem their coupons. More commonly, many consumers forget to bring coupons that they have clipped and saved to the store.
This consumer behavior defeats the manufacturer's purpose for offering the purchase incentive. A manufacturer distributes coupons with the expectation that the coupons will induce sales of its product by offering a discount. However, when the coupon is forgotten or disregarded, the consumer is usually not aware of the incentive when he is selecting a product among different brands at the retail store.
Of course, not all consumers forego the benefit of coupons. In fact, some bring several coupons to the retail store to take advantage of another weakness of the coupon system. Because the verification of redemption conditions is performed by the check-out clerk, a consumer can usually overwhelm the clerk by presenting so many coupons that it is impractical to verify the required purchases for all of them. Typically, the check-out clerk does not have the time to verify that the consumer has bought the correct size or quantity of the correct brand for each of a dozen coupons. As a result, some coupons are misredeemed without the required purchase.
The auditing and reimbursement stages of the coupon system also present several problems. First, unscrupulous persons have used deficiencies in the coupon system to fraudulently submit unredeemed coupons to the manufacturers for reimbursement. For example, some retail store personnel have purchased large quantities of unredeemed coupons from collectors at prices below their face value. The store personnel then return these coupons to the manufacturers for reimbursement at full face value. Although this practice is sometimes used to reap large profits, it is commonly used on a smaller scale to cover shrinkage losses of the retail store. Nevertheless, these fraudulent practices cost manufacturers millions of dollars a year.
Another source of trouble in the coupon system is the coupon clearinghouse. While both the manufacturer and the retail stores rely on the coupon clearinghouse to impartially verify the tallied figures for coupon reimbursement, the volume of coupons audited often requires the clearinghouse to use cheap, unskilled labor, often resulting in erroneous totals.
In the prior art, several methods have been devised to alleviate problems in the coupon system. With the integration of computer systems into the packaged goods industry, there have been a number of attempts to combat the problems in the coupon system through application of available computer technology.
Although equipment used to read machine-readable codes, such as the Universal Product Code (UPC) bar-code, was first designed to improve inventory control and checkout efficiency, U.S. Pat. No. 3,959,624 to Kaslow et al. discloses the use of machine-readable codes on coupons. Coupons bar-coded with the UPC can be read accurately by scanning equipment. The information picked up from the coupon is compared with stored information read from the bar-codes of purchased products. The controlling computer system can determine the validity of the coupon redemption and either allow or inhibit a discount accordingly. Thus, the losses associated with a check-out clerk's failure to verify satisfaction of coupon conditions can be avoided.
In addition, the Kaslow et al. system stores records of the manufacturer names and discount amounts of redeemed coupons to be used later for coupon auditing and reimbursement purposes. With these computer generated totals, the problems associated with fraud and clearinghouse auditing errors are greatly reduced.
In the area of coupon distribution, U.S. Pat. No. 4,554,446 to Murphy et al. reveals two purchase incentive techniques employing computer systems. In the first method, a computerized printer produces machinereadable coupons at the supermarket so that a consumer does not have to remember to bring them. The system can be controlled by store personnel or adapted to receive selections from the consumer directly. Moreover, Murphy et al. suggests the use of machine-readable customer identification cards to limit those consumers eligible to obtain the computer-generated coupons.
The second computer-based purchase incentive method disclosed by Murphy et al. relates to so-called self-liquidating premiums. A self-liquidating premium is essentially an offer from a manufacturer to consumers who purchase a particular product to buy a different product at a substantial savings. Because the premium is offered to entice purchases of the required product, the premium product is usually offered at a break-even price; hence, it is self-liquidating.
In order to take advantage of the premium offer, a consumer buys a specified product. The advertisement for the premium product is usually on the package of the required product. Under the typical method, the consumer must then send the manufacturer some proof of purchase and the premium purchase price. These items are usually sent by mail from the consumer's home.
Murphy et al. discloses a computer system for generating machine-readable sales vouchers to order the premium product at the retail store. The store computer stores files related to the premium offers. When a consumer makes the required purchase, he presents the sales voucher and the payment of the premium purchase price. The store computer records the transaction so that the retail store can order the premium product directly for the consumer. The retail store becomes a point of purchase for premium products, making the offer more convenient for the consumer and thereby increasing the incentive value of the premium offer.
Another coupon distribution technique utilizing a computer system is disclosed in U.S. Pat. No. 4,723,212 to Mindrum et al. Recognizing that a manufacturer desires to distribute coupons to consumers who purchase a competitor's products, Mindrum et al. teaches a system for generating a machine-readable coupon for a product when the bar-code of a competitive product is read by the check-out terminal scanner. Hence, the manufacturer is able to distribute a coupon directly to the consumer it is targeting, a customer of the competition.
Another system exists in the prior art which uses a computer system to offer purchase incentives without distributing coupons. In the system, the consumer is issued a customer identification card with an encoded consumer identification code in machine-readable format. A list of products subject to discounts is distributed at the retail store. When a valid identification card is scanned at the check-out terminal, the store computer automatically discounts those items on the list according to stored product files.
Each prior art system addresses some of the problems related to the coupon distribution and redemption system. However, the prior art devices and methods focus on isolated coupon transactions. None of the prior art systems provides a method for continuing the purchase incentive after the sales transaction involving the coupon is completed. Accordingly, it is further object of the invention to provide a method for encouraging continued purchases of targeted products beyond the one-time incentive of prior coupon systems.